With less than two months for the current fiscal to end and the Government having managed to pocket just over Rs24,000 crore by divesting its stake in Coal India ltd (CIl) and Steel Authority of India ltd (SAIl), it is racing against time to off load its 10 per cent stake in State-owned mining major NMDC before March 31, 2015. The Centre aims to garner Rs5,500 crore through the exercise.
The disinvestment target for FY15 is Rs58,425 crore and though apart from NMDC, stake sales in three more major PSUs namely Indian Oil Corporation (IOC), BHEl and Nalco are being pushed by the Government during this month itself, sources pointed out that it won't be easy to do so, considering the not so enthusiastic response shown by investors and bankers in CIl divestment and ONGC's road shows held abroad.
Government, sources pointed out, was expecting to pocket around Rs40,000 crore through stake sales in CIl and ONGC. However, the tepid response to CIl's stake sale, which brought in only Rs22,500 crore to the exchequer, came as a setback to the Centre's hopes achieving the disinvestment target for the current fiscal. If this was not enough, the delay by the Petroleum Ministry in taking a call on working out the subsidy sharing formula between it and ONGC, has put the stake sale in the upstream company on the back burner.
Moreover, the response to Government's efforts to appoint top investment bankers for NMDC's stake sale, has also not been enthusiastic. Only four investment bankers - ICICI Securities ltd, Axis Capital ltd, Kotak Mahindra Capital ltd, and SBI Capital Markets ltd - showed interest in managing the NMDC stake sale, while the Government was expecting to rope in at least five bankers. All the four entities made presentations before Department of Disinvestment (DoD) officials on Wednesday and though the financial bids were opened the same day itself, the outcome could not be immediately ascertained.
Steel Ministry sources on their part were hopeful that the NMDC stake sale will come through in the current fiscal itself. A source privy to the development told The Pioneer that there should not be any problems in the stake sale as the Government's previous 10 per cent share sale in the same company in December 2012 had been a success.
At that time, the offer for sale (OFS) had seen active participation from both foreign as well as domestic investors and had helped the Government pocket Rs5,900 crore. The issue was subscribed by over 1.7 times. Also then in December 2012, there were five merchant bankers which handled that NMDC stake sale. This time however, only four entities have come forward to participate in the process.
In the given scenario therefore, the DoD is trying to fast track the process of finalising merchant bankers for stake sales in IOC, BHEl and Nalco within the next week. This is being done as part of a back up plan, so that in case the NMDC divestment fails to meet the deadline, the aforementioned stake sales can be somehow pushed through.